SUMMARY: Although Gmail addresses aren't a big part of anyone's lists yet, the new service has changed the face of email profoundly -- especially users' attitudes toward their hitherto low-valued accounts at Hotmail, etc. Our 2004 update includes a useful list of the top free email account domains (useful for sorting your lists to compare delivery rates, etc.) And you'll get action-steps to take now in preparation for the new email world. By the way, did you know AOL bought MailBlocks? That alone could really affect your lists.

Despite recent retrenchment in the sector, free email addresses still make up a big chunk of house lists, particularly for business-to-consumer marketers. Gmail's arrival in April shook up an industry in desperate need of some energy. And, as Edwin Hayward of EmailAddresses.com describes it, "The tiny little tail has wagged the entire email industry dog."

So where's the free and web-based email sector heading? And how should marketers prepare themselves?

Gmail's competitors are scrambling to come up with better offers to preempt leakage to the new service. As a result, free email accounts have been upgraded across numerous providers, with vastly increased email storage (to 50-500 times the previous levels), better spam and virus filtering, removal of pop-ups and graphical ads on web-based services, etc.

The result is that many more people are starting to treat their web-based or free account as a "real" email address. And the more services and stored emails they have, the less likely they are to want to change accounts.

So while the short-term should see some migration to Gmail, the long-term active use of free email accounts should rise, and address turnover fall.

If you're automatically rejecting address submissions from Hotmail accounts and similar, or segmenting them out as low-value names, it's maybe time for a rethink. Keep tracking closely at least.

Key free email domains to monitor

The good news is that due to industry consolidations, you'll have fewer services to monitor than in past. Jeremy Howard of FastMail.fm keeps a list of those web-based and free services with the most global users and shared his results with us...

Howard estimates that Hotmail And Yahoo together account for around 125 million *active* users, more than the rest of the list combined. (AOL isn't usually classified with these types of services, but it's another one that should be on your list.)

Is Gmail already a factor on house lists, despite its newness? We spoke to one big email marketer, David Rosen of MyPoints.com, and he told us, "it has not hit the mainstream of our membership base, but we have seen huge growth among job applicants, business partners and ourselves!"

Hayward suggests sorting your house list by domain name and picking out those accounting for more than 1% of your list (or whatever number you think big enough to deserve attention). Then check the email service behind those domains and sign up for test accounts where you can.

Be aware of the implications of bigger storage allowances

Marketers generally welcome increases in storage space for email users. It means no more bounces from overflowing inboxes, less incentive for recipients to delete your email etc.

There's a downside, too, though. Hayward explains, "If you imagine somebody abandons a Hotmail account today. By next week it's going to be bouncing because their 2MB is filled very quickly. If they abandon their 250MB Hotmail account, which has better spam filtering, it will take a year to fill up and start bouncing."

Hayward emphasizes the value of segmenting your list by domain, and tracking responses accordingly. If high-storage free addresses are declining in performance relative to the past and to other addresses, it may just be due to abandoned accounts.

Prepare contingency plans for potential deliverability catastrophes

The big providers are constantly acting to reduce the amount of UCE their members receive, and often catching legitimate marketing emails at the same time. A cynic might suggest that it's even in their own interests to have such false positives, since it forces legitimate marketers to pay for whitelisting or similar services.

As Hayward notes, "Because more people are going to stay with the big ones, as the quality of the their services gets better, the moves that they make towards spam filtering are going to impact marketers a lot more." He admits it has its benefits, too, since the value of the destination mailbox rises, the less other commercial mail you have to compete with.

He explains, "A person signs up and you send them a 'you must confirm your opt-in' message. They never get that because it sits in limbo at their provider, who has sent you back a 'you must activate this link within 7 days C/R email.' And that mail is getting thrown away with all the automatic bounces."

"Now suppose a big provider implements C/R. What do you do when 35 million confirmation emails require a manual verification? And when 10 seconds later all the other big providers put something in place to match that."

When we spoke with Hayward, this scenario was just a hypothesis. Then AOL announced the acquisition of the Mailblocks C/R email service and suggested it would eventually be made available to their members as an optional feature.

Our recommendations:

-- Make sure your double opt-in confirmation requests (or welcome messages if you use single opt-in) have an active "reply-to" address where you can manually review incoming mail for verification requirements.

-- Every time you use a different sender address, you'll need to manually verify a C/R request. Harmonize sender addresses across your outgoing email where you can.

-- Do your sums to work out whether the value of an additional address justifies a manual verification. But remember that people using C/R get no spam and far less commercial email than others, which makes them more valuable.

B-to-B marketers beware: more people are using free email for work, too

While free email issues traditionally concern B-to-C marketers most, that's slowly changing. More business users are turning to free services, at least as a back-up to their work account.

This is partly because of the more professional service such accounts now offer, but also because, as Hayward explains, "there are so many problems getting an email through that some people think, 'Microsoft is a huge company, so they must have people dedicated to figuring out how to get emails to arrive safely, so I'll use Hotmail as my backup account'."

Don't rest on your laurels - there are more changes to come

Hayward warns email marketers to keep monitoring the free email industry, "The only certainty in the sector is uncertainty. If you continue to do the same thing, week after week, your results will always get worse...if you're complacent, you lose."

Among other trends he sees coming...

-- more and more companies blocking access to web-based email at work, so peak response times to campaigns from those addresses will shift to the evenings and weekends.

-- with storage no longer a differentiator between free email services, many are beginning to compete on connectivity - allowing customers to read their email outside the usual web-based interface, again affecting how your emails will get displayed.

-- security considerations means more and more services and applications blocking external and tracking images.

His conclusion to dealing with the challenges? "There's no big silver bullet, but you have to keep firing all the little ones."

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